Housing Affordability Under Scrutiny
On Monday, Housing and Urban Development Secretary Scott Turner spoke to Breitbart News, defending the Trump administration’s approach to improving housing affordability. His comments come as recent data reveals a significant dip in confidence among U.S. homebuilders, the lowest point since June 2012. This decline is attributed to escalating mortgage rates, rising construction expenses, and a decrease in buyer demand.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), released on October 19, showed a three-point drop in builder confidence regarding newly constructed single-family homes, falling from 32 to 29 in October.
This decline marks the lowest level builders have faced in over 14 years. They are currently dealing with mortgage rates topping 7 percent, alongside higher energy and construction costs, and challenging labor and lot conditions.
In his statement to Breitbart, Turner emphasized that simply regulating won’t solve the housing affordability issue. He highlighted the Trump administration’s efforts to dismantle barriers that hinder builders and buyers, asserting, “The Trump Administration has taken numerous, bold actions to address the housing market challenges caused by excessive regulation, high construction costs, and barriers to new housing supply.”
All three main components of the housing index saw declines in October. Current sales conditions slipped by two points to 33, expectations for sales in the next six months dropped five points to 32, and prospective buyer traffic also fell five points to reach 18.
NAHB Chief Economist Robert Dietz attributed the downturn to ongoing affordability issues and limitations on housing supply. He remarked, “Housing remains squeezed by supply-side constraints and significant affordability challenges.” He also noted that while demand exists, higher mortgage rates and increased construction costs are sidelining many potential buyers.
Interestingly, the traffic of potential buyers has reached its lowest since April 2012, excluding the early days of the COVID-19 pandemic. In October, 43 percent of builders opted to lower home prices, the highest percentage noted from 2020 to 2026. The average price reduction remained steady at 6 percent for seven months, while 65 percent of builders offered sales incentives, a trend lasting for 19 consecutive months.
NAHB Chairman Bill Owens identified rising mortgage rates, inflation, and construction costs as key challenges for the housing market. He acknowledged the Trump administration’s regulatory reforms but also noted that builders are facing rising expenses for construction loans, materials, and diesel.
Moreover, Owens mentioned that over one-third of builders reported experiencing immigration enforcement activity in their areas recently, which has caused construction delays and deterred legal workers from showing up for work.
Builder confidence has dropped from a peak of 38 in March to 29 in October, remaining below the neutral threshold of 50, which indicates that more builders perceive conditions as unfavorable than favorable. The Trump administration argues that high regulations, construction costs, and limits on new development are major hurdles for Americans aiming to purchase homes.
Currently, the median home price in the U.S. stands around $400,000, with roughly $100,000 of that cost linked to regulatory requirements. Addressing these expenses could potentially make homes around $300,000 more accessible, even amidst high mortgage rates.
On March 13, Trump signed Executive Order 14394, which called for a review of regulations impacting residential construction. This included examining environmental permits, energy-efficiency criteria, and constraints on manufactured housing. The order also tasked HUD with proposing ways for state and local governments to streamline permitting, trim fees, and ease development processes. These measures align with HUD’s objective to make housing development faster and cheaper.
That same day, Trump signed Executive Order 14393 to improve access to mortgage credit by relaxing regulatory burdens on lenders. This order urged federal regulators to reconsider mortgage lending rules and appraisal processes while promoting involvement from smaller financial institutions.
Additionally, on January 20, Trump signed Executive Order 14376 aimed at reducing competition between homebuyers and large institutional investors. This order directs federal agencies to limit certain acquisitions of single-family homes by big investors, allowing exceptions for qualifying build-to-rent communities.
Apart from these executive orders, HUD has also implemented various strategies to reduce housing costs and boost supply. Recently, HUD rescinded requirements tied to the 2021 International Energy Conservation Code, potentially saving families up to $30,000. Furthermore, on October 17, HUD revised FHA multifamily financing policies to allow communities of single-family homes to access FHA-insured financing, aiming to stimulate more housing construction.
